Formal registration of companies has many immediate benefits for the companies and for business owners and employees. Legal entities can outlive their founders. Resources are pooled as several shareholders join forces to start a company. Formally registered companies have access to services and institutions from courts to banks as well as to new markets. And their employees can benefit from protections provided by the law. An additional benefit comes with limited liability companies. These limit the financial liability of company owners to their investments, so personal assets of the owners are not put at risk. Where governments make registration easy, more entrepreneurs start businesses in the formal sector, creating more good jobs and generating more revenue for the government.
Below is a detailed summary of the bureaucratic and legal hurdles faced by entrepreneurs wishing to incorporate and register a new firm in Papua New Guinea. It examines the procedures, time and cost involved in launching a commercial or industrial firm with up to 50 employees and start-up capital of 10 times the economy's per-capita gross national income.
This information was collected from World Bank: Doing Business
| No. | Procedure | Time to Complete | Associated Costs |
|---|---|---|---|
| 1 | Obtain a company seal Although companies are not expressly mandated by law to make a company seal, they are required to have a seal to meet the Companies Act requirements for issuing share certificates or for entering into deeds and contracts. The fee for a seal varies with its size but is about PGK 40–80. A seal can be obtained in a week. | 4 days | PGK 60 |
| 2 | Obtain name and register the company with the Registrar of Companies A company registration application must be submitted to the Registrar of Companies. Using standard Form 1, the application must include 3 proposed names of the company, the postal and street address of the registered office, and the number and names of the directors, the shareholders, and the secretaries. Form 1 must also be accompanied by: • A certified copy of the company constitution, if applicable • Form 2, the consent of each director, which requires the full name, nationality, date of birth, and postal and residential addresses • Form 3, the consent of any secretary, which requires the full name, nationality, date of birth, and postal and residential addresses • Form 4, the consent of each shareholder, which requires each shareholder’s date of birth, full name or corporate name, nationality or country of incorporation, postal and residential addresses, number and class of shares, and consideration for shares • Form 6, an application for name reservation A company is no longer required to have a memorandum or articles of association. A proposed company may opt to have a constitution but is not required to do so. The total registration fee is PGK 260 for domestic companies as follows: • Application to register a company: PGK 150 • Application to reserve company name: PGK 50 (see Procedure 2) • Stamp duty: PGK 60. If the company has a constitution, an additional stamp duty fee of PGK 40 applies | 18 days | PGK 260 |
| 3 | Register with the tax authorities; register for VAT purposes; register with the Employment Register Under the Income Tax Act, a company carrying on business or deriving income in Papua New Guinea must appoint a Papua New Guinea resident to be a public officer. The appointment must be made 3 months from the date the company starts business operations or derives income in the country, by written notice to the Internal Revenue Commission. All tax notices and forms are filed to the attention of the Internal Revenue Commissioner. Although different officers in this agency will likely attend to the separate notices and forms, these forms can be submitted to the Commissioner in a single filing. The procedure takes a week to a month. If a company employs one or more employees in Papua New Guinea with a weekly salary of more than PGK 126 a week, they must register as a “group employer” by submitting a written notice to the Internal Revenue Commission. No fees apply. Any business or individual whose annual turnover exceeds (or is likely to exceed) PGK 100,000, must register for goods and services tax (GST) by filing Form 1 with the Internal Revenue Commission. This standard form requires the company business name and a description of its proposed main business activities along with the street and postal address of the registered office and a statement of its monthly sales and liabilities (approximate). No fees apply. | 9 days | no charge |
| 4 | Apply for a trade license from the National Capital District Commission Companies in Port Moresby must obtain a trading license from the National Capital District Commission. | 20 days | PGK 50 |
| * 5 | Open an account with an Authorized Superannuation Fund (ASF) According to the amendment to the Superannuation (General Provisions) Act 2000, a company with 15 or more employees must contribute to an Authorized Superannuation Fund (ASF; a superannuation fund that the Central Bank has approved and licensed). An employer must remit its employer contributions to the ASF within 14 days of the end of each calendar month in which the relevant contribution is due for deduction from an employee's pay. It is an offence not to make contributions. Under the act, the Central Bank has the power to instigate proceedings against any offence by a person. It takes 7–10 days to open an account. | 9 days, (simultaneous with procedure 3) | no charge |
| * 6 | Register workers with the private insurers for work injury Although there is no registration requirement, it is an offence for an employer to employ any worker without an insurance or indemnity policy issued by a licensed insurer for injury to the worker arising out of or during employment. Registration time is 10–30 days. | 20 days, simultaneous with procedure 3 | PGK 200 |